Goods and Service Tax (GST)

About GST

GST (Goods and Services Tax) is the indirect tax reform of India. GST is a single tax on the supply of goods and services. It is a destination-based tax. GST has subsumed taxes like Central Excise Law, Service Tax Law, VAT, Entry Tax, Ontario, etc. GST is one of the biggest indirect tax in the country. GST is expected to bring together state economies and improve the overall economic growth of the nation.

GST is a comprehensive indirect tax levy on the manufacture, sale and consumption of goods as well as services at the national level. It will replace all indirect taxes levied on goods and services by states and Central. Businesses are required to obtain a GST Identification Number in every state they are registered.

There are around 160 countries in the world that have GST in place. GST is a destination-based tax where the tax is collected by the State where goods are consumed. GST has been implemented in India since July 1, 2017, and it has adopted the Dual GST model in which both States and Central levies tax on Goods or Services or both.

• SGST – State GST, collected by the State Govt.
• CGST – Central GST, collected by the Central Govt.
• IGST – Integrated GST, collected by the Central Govt.
• UTGST – Union territory GST, collected by the union territory government

GST Bill

The bill was passed by the Rajah Sabha on 3 August 2016, and the amended bill was passed by the Lok Sabha on 8 August 2016. The bill, after ratification by the States, received assent from President Pranab Mukherjee on 8 September 2016 and was notified in The Gazette of India on the same date.

           The GST was launched at midnight on 1 July 2017 by the President of India, Pranab Mukherjee, and the Prime Minister of India Narendra Modi.

For the implementation of GST, apart from the Constitution Amendment Act, some other statutes are also necessary. Recently 5 supporting laws to the GST were recommended by the council. 4 of the bills should be passed by the parliament, while the 5th one should be passed by respective state legislatures. The details are given below.

1. The Central Goods and Services Tax Bill 2017 (The CGST Bill).
2. The Integrated Goods and Services Tax Bill 2017 (The IGST Bill).
3. The Union Territory Goods and Services Tax Bill 2017 (The UTGST Bill).
4. The Goods and Services Tax (Compensation to the States) Bill 2017 (The Compensation Bill).
5. And a state GST will be passed by the respective state legislative assemblies.

• Tax slabs are decided as 0%, 5%, 12%, 18%, and 28% along with categories of exempted and zero-rated goods for different types of goods and services.
• Further, a cess would be levied on certain goods such as luxury cars, aerated drinks, pan masala and tobacco products, over and above the rate of 28% for payment of compensation to the States.
• However, which goods and services fall into which bracket is still an enormous task to be completed by the GST council.
• The highest tax slab is pegged at 40%.

101 Amendment of GST

               Addition of articles 246A, 269A, 279A. Deletion of Article 268A .Amendment of articles 248, 249, 250, 268, 269, 270, 271, 286, 366, 368, 6 Schedule, 7 Schedule.

Various Types of Direct Taxes

• Income tax
• corporate tax
• Wealth tax
• Gift tax
• Estate duty
• Expenditure tax
• Fringe Benefit Tax

Various Types of Indirect Taxes

• Service tax
• Excise duty
• Value added tax
• Custom duty
• Securities Transaction Tax(STT)
• Stamp Duty
• Entertainment tax

Impact of GST on the Indian Economy

• Create a unified common national market for India, giving a boost to Foreign investment and the “Make in India” campaign
• Boost export and manufacturing activity and lead to substantive economic growth
• Help in poverty eradication by generating more employment
• Uniform SGST and IGST rates to reduce the incentive for tax evasion

Impact on Consumers

• Simpler Tax system
• Reduction in prices of goods & services due to the elimination of cascading
• Uniform prices throughout the country
• Transparency in the taxation system
• Increase in employment opportunities

Impact on Traders

• Reduction in multiplicity of taxes
• Mitigation of cascading/ double taxation through input tax credit
• More efficient neutralization of taxes especially for exports
• Development of a common national market
• Simpler tax regime and Fewer rates and exemptions

GST Council

• It is the 1^st Federal Institution of India, as per the Finance minister.
• It will approve all decisions related to taxation in the country.
• It consists of the Centre, 29 states, Delhi and Puducherry.
• Centre has 1/3^rd of voting rights and states have 2/3^{rd of} voting rights.
• Decisions are taken after a majority in the council.

0% Tax Rate Products

1. Milk
2. Eggs
3. Curd
4. Lassie
5. Unpacked Food grains
6. Unpacked Pannier
7. Guar
8. Unbranded Natural Honey
9. Fresh Vegetables
10. Salt
11. Kajal
12. Educations Services
13. Health Services
14. Children’s Drawing & ColouringBooks
15. Unbranded Atta
16. Unbranded Maida
17. Besan
18. Prasad Palmyra Jaggery
19. Phool Bhari Jhadoo
20. Palmyra Jaggery

5% Tax Rate Products

1. Sugar
2. Tea
3. Packed Pannier
4. Coal
5. Edible Oils
6. Domestic LPG
7. PDS Kerosene
8. Cashew Nuts
9. Milk Food for Babies
10. Fabric
11. Spies
12. Life-saving drugs
13. Raisin
14. Roasted Coffee Beans
15. Skimmed Milk Powder
16. Footwear (< Rs.500)
17. Apparels (< Rs.1000)
18. Coir Mats, Matting & Floor Covering
19. Agarbatti
20. Mishti/Mithai (Indian Sweets)
21. Coffee (except instant)

12% Tax Rate Product

1. Butter
2. Ghee
3. Almonds
4. Computers
5. Processed food
6. Mobile
7. Fruit Juice
8. Packed Coconut Water
9. Umbrella
10. Preparations of Vegetables, Fruits, Nuts or other parts of Plants including Pickle Murabba, Chutney, Jam, Jelly

18% Tax Rate Products

1. Hair oil
2. Toothpaste
3. Soap
4. Pasta
5. Capital goods
6. Industrial Intermediaries
7. Ice-cream
8. Corn Flakes
9. Soups
10. Toiletries
11. Computers
12. Printers

28% Tax Rate Products

1. Small cars (+1% or 3% cress)
2. High-end motorcycles (+15% cress)
3. Consumer durables such as AC and fridge
4. Beedis are NOT included here
5. Luxury & sin items like BMWs, cigarettes and aerated drinks (+15% cress)